Hank Paulson’s Dry Heave

It’s October 2008, the middle of the global financial apocalypse, and Treasury Secretary Henry Paulson has kayaked to a private island. The most expensive government spending act in American history passed a day earlier, but now he’s hunting redfish. “I felt like myself for the first time in a long while,” he sighs in On the Brink, the memoir released Monday. “Just Hank Paulson, out fishing.”

It’s not clear what Mr. Paulson was angling for when he decided to publish a 477-page autobiography. If he wanted to burnish a legacy, to get himself removed from the list of the crisis’ great villains (he’s No. 6 on Time’s), it didn’t work. The phrase “we had little choice” is actually the best he can come up with to justify the bailouts.

And he couldn’t have wanted to simply provide a good inside look at his life and times, because On the Brink is a portrait of the bureaucrat as a nauseous and drowsy man. He solemnly describes how he dry-heaved in front of an American flag, in a bathroom stall and in front of Senator Judd Gregg. Other hour-by-hour details (especially a chronicle of his work-related sleeplessness) would be autobiographical triumphs if they didn’t contrast so grimly with the book’s void of thoughtful analysis. With the exception of a short and intensely dry afterword, it lacks any dissection of the intricacies of the crisis, its causes or its aftermath.

What’s much worse is the sense he gives that there wasn’t much fussing over detail as the crisis unfolded, either. He and his colleagues flew by the seat of their pants, Mr. Paulson concedes, “making it up as we went along.” He says he realized on Sept. 12, 2008, that AIG was “one more institution to put on our watch.” The government spent $85 billion to bail it out on Sept. 16.

His memoir is like Tolstoy. It gives the spectacularly unsettling sense that world history is decided by an assortment of guys who are improvising, and may not be particularly good at it. Only, unlike in Tolstoy, there’s a lot of nausea.

THE GOOD NEWS HERE is that Mr. Paulson is not shy about his personal eccentricities. He concedes a fondness for locking himself “in the bathroom with Sports Illustrated to relax in quiet.” He used to speed through his children’s bedtime stories because of his work schedule; one night, his wife, who likes to call him Pea, forced him to read with expression. “No, no!” the kids objected. “Read like a daddy, not a mommy.”

During his own childhood, he bailed hay, turned butter, fostered pet raccoons and took Canadian canoe trips “with difficult portages.” Dad used to cut his hair: “He did such a bad job that he left bare patches on our scalps, then he filled in the bald spots with pencil and said no one would notice.” He didn’t mind, though it traumatized his little brother, whose fragility ensured he’d become a mere Lehman Brothers bond salesman and not a Goldman Sachs CEO or Treasury secretary.

After leaving one job for the other in 2006, Mr. Paulson says his “number one concern was the likelihood of a financial crisis,” and that he told George Bush, in a wood-paneled Camp David conference room, all about credit default swaps, systemic risk and the growth of unregulated hedge funds. If that’s true, it’s Wall Street’s version of the “Bin Ladin Determined to Strike in US” presidential brief.

Then again, Mr. Paulson doesn’t explain why his first sleepless night didn’t come until Bear Stearns began to collapse two years later. Instead, he offers that he could kick himself for saying in an April 2007 speech that the subprime problem was “largely contained,” then points out that plenty of other people were wrong, too.

But he should have known better. At a dinner with top bankers at the Fed a few months later, as he tells it, the most powerful chief executives on Wall Street were mournful addicts begging to be forced to quit their opiates. “Isn’t there something you can do to order us not take all of these risks?” Citigroup CEO Chuck Prince asked; Blackstone’s chief, Stephen Schwarzman, said he couldn’t resist taking easy money. What does it mean that these kingpins knew what they were doing and were begging to be stopped? Mr. Paulson won’t say.

About the problem of rococo Wall Street greed, he admits that he “pushed back hard” against TARP’s pay restrictions, adds that he “was as appalled as anyone at Wall Street’s pay practices” and then jogs away from the mess. Eventually, he shuffles back to describe a conversation with a Democratic senator—“once again my ear was being chewed off about compensation.” He doesn’t mention that he sold half a billion dollars’ worth of Goldman stock when he came to the Treasury, reportedly saving more than $100 million in taxes thanks to new I.R.S. rules about federal service.

Except for whiffs of his ire for politicians (Nancy Pelosi makes him pour his Diet Coke into a glass), the book flatters widely and passionately. The Watergate villain John Ehrlichman, a boss during Mr. Paulson’s early days at Nixon’s Domestic Council, is “dedicated”; Bob Rubin “put the public interest ahead”; the Chinese are old friends of his; AIG’s Bob Willumstad is “an incredible gentleman”; and Lehman’s Dick Fuld is “direct and personable.” Never mind that Mr. Paulson reportedly considered the latter to be a thuggish glutton.

What’s much worse is that the book makes the circumstances of Lehman’s fall even more convoluted. Mr. Paulson says that he and Tim Geithner, despite their public stance against more bailouts, agreed just a few days before the bankruptcy that “a Lehman failure would be more expensive for the taxpayers.” He writes that he would have helped the firm by supporting a takeover, as he did with Bear Stearns, but that the government’s “hands were tied” because no suitors wanted Lehman. That makes no sense: Bank of America and Barclay’s were both interested, and both shrank away when the government said it couldn’t help.

AS TARP WAS BEING DEVELOPED, his own chief of staff and a White House deputy both took Mr. Paulson aside to complain he was moving too fast. The steps needed to be analyzed more carefully, and they felt his approach discouraged dissent. “I told them that if I had waffled one bit,” he writes, “we wouldn’t have a program to debate.”

Last weekend, two days before the release of the book, TARP’s inspector general released a report to Congress outlining the program’s neon-colored shortcomings: “It is hard to see how any of the fundamental problems in the system have been addressed to date.” Most of TARP’s goals have simply not been met: Home foreclosures remain at record levels, unemployment is the highest it has been in decades and lending to American businesses and consumers continues to fall.

As far as that last point goes, the only thing he says on the matter is, “I didn’t think I could tell the banks how much to lend or to whom.” That’s because his message, which he can’t help but eventually make explicit, is, “I make no apology.”

Bear Stearns was rescued but Lehman wasn’t. Citigroup was going to buy Wachovia until Wells Fargo swooped instead. Cancerous Fannie Mae and Freddie Mac were given clean bills of health by their regulator just before nationalization. AIG was given a gruesome amount of money that will almost never be returned. And that’s just the way it is, On the Brink says.

Not only did Mr. Paulson “not have time for regret, recriminations, or second-guessing,” but he doesn’t use the newfound power of hindsight. He even calls it a pandering “political approach” to criticize the rating agencies, which were essentially paid to say all was well with a diseased system.

Surely he has more sophisticated and subtle insights into the ugliness of American finance, but he keeps them to himself. “I don’t mean to minimize our troubles,” the book’s finale declares, “but every major country has more-significant problems.”